A Hippocratic Oath for Policy Makers

1. A Hippocratic Oathfor Policy Makers Robert W. Hahn Executive Director AEI – Brookings Joint Center for Regulatory Studies Presented at the PRI Conference Regulating Wireless in California: Bill of Rights … or Wrongs? San Francisco, CA April 15, 2003

2. Roadmap • Make three observations about regulation • Offer a paradigm that embraces the Hippocratic Oath • Applies to Wireless

3. 1. Economic Regulation of Competitive Markets Reduces Economic Welfare • Price and Entry regulation in competitive markets has been a failure • Airline, railroad, and trucking regulations led to price distortions • After transportation industries deregulated, estimates of annual consumer benefits between $35 and $40 billion (in 1990) • lower prices and better service • Similarly, wireless regulation is unlikely to help consumers

4. 2. Government Intervention Can Have Unintended Consequences • Example: taxation policies have equity implications • Taxes raise prices consumers face, lower demand • High wireless taxes (CA wireless taxes exceed 19%) could adversely affect low income customers • Regulating wireless service terms will lead to unplanned effects

5. 3. The Perfect Is the Enemy of the Good • Regulation frequently strives for perfection • Man is Imperfect, there are going to be complaints • Cost of fixing “last” complaint likely to far exceed benefits

6. Significant Market Failure? NO NO STOP YES Government Policy Likely to Improve Things? STOP YES Consider Implementing Policy A Policy Paradigm

7. A Hippocratic Oath forPolicy Makers • Don’t intervene if you don’t have a good reason • If you do intervene, try to do more good than harm

8. Robert W. Hahn Executive Director AEI – Brookings Joint Center for Regulatory Studies 1150 17th Street, NW Washington, DC 20036 Phone: 202.862.5909 Fax: 202.862.7169